COMMENTARY: Managed Futures Strategy Fund January 2018

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  • Equities: Long Chinese equities
  • Fixed income: Short 2-year U.S. government bonds
  • Currencies: Long British pound versus U.S. dollar
  • Commodities: Long crude
  • Equities: Long U.K. equities
  • Fixed income: Long 10-year German bonds (Bund)
  • Currencies: Long Brazilian real versus U.S. dollar
  • Commodities: Short wheat

Past Commentaries

January 2018

December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017


The fund returned +8.02 in January, with the most notable gains in the currency and equity sectors.

Equities continued the run upwards we saw throughout 2017. U.S. fiscal policies and continued optimism about global growth added to the momentum. These trends persisted in the face of a U.S. government shut down and political tensions in Europe.

The U.S. dollar weakened significantly versus its major G10 counterparts. A weaker GDP release and comments by U.S. Treasury Secretary Steven Mnuchin weighed on the dollar. In commodities, a weaker dollar helped gold outperform while crude oil strengthened by more than 3% due to decreases in supply.

The largest risk allocation in our portfolio was in commodities, followed by long positions in global equities. Exposure to currencies increased due to broadening trends. Fixed income exposure remained historically low.

Performance (as of 1/31/2018)
The Total Annual Fund Operating Expenses for the Longboard Managed Futures Strategy Fund class A and I are 3.13% and 2.88% respectively. The maximum sales charge for Class A (Max Load) shares is 5.75%. The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Past performance is no guarantee of future results. For performance information current to the most recent month-end, please call toll-free 855-294-7540 or visit our website, www.longboardfunds.com. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.


January provided a fertile trading environment for long-term trend followers. Trends in equity strength and U.S. dollar weakness persisted and even grew.

With a tense start to February, these trends could face opposition. U.S. political tensions, concerns about global equity valuations and a change in volatility likely will test the resilience of macro markets. However, there is an innate resilience within long-term trend following. These disciplined investment strategies identify market trends in an objective way, while utilizing key processes to manage risk. We remain confident in our systematic, rules-based approach as we look ahead to an uncertain trading landscape.


Consumer discretionary and financials outperformed as global equities strengthened throughout the month. Ultimately, U.S. equities rallied more than 5%, with corporate tax reform fueling an upbeat outlook. In the Eurozone, optimism about the region’s economic recovery caused equities there to strengthen as well. But the United Kingdom underperformed, closing the month slightly lower. This is due to fears that a stronger British pound would negatively impact the economy.

Directional positions within the equity sector remained intact. The portfolio is net long equities globally, as the strength and scope of long-term trends persist for the time being.


The U.S. yield curve, the spread between 2- and 10-year Treasuries, fell below 60 basis points in November. This is the lowest level in a decade, and typically signals a slowing economy. Selling pressure on the front end of the curve caused the 2-year note to enter a downtrend. Australian bonds rallied against their former long-term downtrends, driven by a downgraded inflation forecast from the Reserve Bank of Australia. Other sovereign fixed income markets remained muted.

We closed a short position in Australian 3-year bonds and opened a new short position in the U.S. 2-year Treasury. Our fixed income exposure remains on the low side of its historical range. This low exposure reflects the lack of long-term trends in global sovereign bond markets.


The U.S. dollar weakened versus all other G10 currencies, as well as many emerging market currencies. The dollar index reached a new three-year low. We saw slightly weaker employment data, a government shutdown, and U.S. Treasury Secretary Steven Mnunchin stating “a weaker dollar is good for us as it relates to trade.” Elsewhere, German politics remained a focus and optimism for Eurozone growth helped boost the euro.

We opened new long positions in the Swiss franc, Australian dollar and Norwegian krone versus the U.S. dollar. These changes increased our overall currency exposure, with a clear bias for a weaker U.S. dollar.


Commodities continued to strengthen in January for the most part. Oil rallied in reaction to political unrest in the Middle East and to supply concerns related to production cuts. Natural gas ended the month higher, with colder temperatures pushing demand higher. Precious metals also rose as gold rallied nearly 3% amid a macro background focused on a weaker U.S. dollar.

We opened new long positions in gold, and closed short positions in platinum and silver during the month. These changes moderately decreased our overall commodity exposure heading into February.

Commodity Market
A physical or virtual marketplace for buying, selling, and trading raw or primary product such as natural resources, agricultural products, and livestock.
Forward Contract
A non-standardized contract between two parties to buy or sell a specified asset of specified quantity with delivery and payment occurring on a specified date.
Futures Contract
A standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality with delivery and payment occurring on a specified date.
Buying an asset such as a stock, commodity or currency with the expectation that the asset will rise in value.
Risk Allocation
The estimated maximum equity a position could lose, divided by the estimated aggregate equity currently at risk of loss across all positions inthe portfolio.
Selling an asset such as a stock, commodity or currency, with the expectation that the asset will decrease in value.
Holding periods averaging greater than one year.


Investors should carefully consider the investment objectives, risks, charges and expenses of the Longboard Managed Futures Strategy Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at https://www.longboardfunds.com or by calling 855-294-7540. The prospectus should be read carefully before investing. The Longboard Managed Futures Strategy Fund is distributed by Northern Lights Distributors, LLC, a FINRA/SIPC member. Longboard Asset Management, LP, is not affiliated with Northern Lights Distributors, LLC.


Mutual funds involve risk including possible loss of principal. The fund will invest a percentage of its assets in derivatives, such as commodities, futures and options contracts. The use of such derivatives and the resulting high portfolio turnover may expose the fund to additional risks that it would not be subject to, if it invested directly in the securities and commodities underlying those derivatives. The fund may experience losses that exceed those experienced by funds that do not use futures contracts, options and commodities. Changes in interest rates and the liquidity of certain investments could affect the fund’s overall performance. The fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the fund’s value. Other risks include credit risks and investments in fixed income securities, structured notes, asset-backed securities and foreign investments. Furthermore, the use of short positions and leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the fund’s share price. The fund is subject to regulatory change and tax risks. Changes to current regulation or taxation rules could increase costs associated with an investment in the Fund.